Pious declarations by the Government and strident demands by the Opposition to get back money stashed away in secret accounts will not cure this disease.
The ongoing campaign in the media about the hoarded billions in Swiss banks that allegedly belong to hawala-patronising and black-money generating Indians is hotting up. However, this debate has blithely ignored the vital components of the very structuring of political and commercial life in India. Without knowing the specifics, these illicit riches are totted up, estimated to be a mouth-watering Rs 500 billion ($1.4 trillion) according to a report prepared by the BJP, and there's talk about liberating substantial development funds should this money be repatriated.
But even as we entertain such fantasies, we must realise that the stashing of such vast sums abroad is a symptom of a pervasive disease, and not just a collective act of deviancy from the honest norm. So, to get at these monies now or in the future would call for a sea-change in the way we run things in India. On the other hand, the UPA Government's claimed intention to get back this money from overseas might be no more than eyewash. If a few diamond merchants are somehow brought to book and their tax-evading monies are repatriated, no doubt some good will come of it, but it would certainly not cure the malaise. To slay this fiscal anaconda will take much more effort.
Consider that no electioneering or constituency 'management' or indeed the expenses associated with the day-to-day running of political party machineries can take place without the provision of an enormous amount of money. This money is much beyond the scope of the official 'party fund' charged in miniscule amounts from party members. It is also a cut above constituency allowances and figures stated in ridiculously out-of-date guidelines on how much a man or woman may spend in order to get elected in the first place.
The amount called for runs into tens of thousands of crores of rupees, much of it extorted from business and industry for party coffers in cash. It is 'ready money', legitimately required — both to cater to the inevitable costs of patronage-based loyalty among cadre and grassroots political organisers and workers, and the inflated costs of development in rural areas which mostly comprise constituencies. Also included in the picture is the cost of chartering private planes and helicopters that are routinely used by politicians for political rallies and constituency visits, along with the large fleets of vehicles required to ferry them and their staff on the ground.
On the other side of the fence, no business development can take place without substantial bribes being paid to a gargantuan babudom, a circumstance, to be fair, in place from Mughal times, with a suitably hoary, even sophisticated, tradition of bakhsheesh and patronage. Today, post the British overlays — its monopolies, duties, cesses, taxes, permissions, warrants, licences, exclusions, inclusions, requisitions over and above the old Mughal ones — we have tens of millions of un-sackable babus empowered with myriad levels of sanctioning authority and oversight.
Furthermore this bribe money — in small instalments for the humble — must be traceless. However, if more substantial sums are warranted for the powerful and exalted, they must be routed through labyrinthine benami courses, with a great deal of it being paid in kind in the form of property transferred, bought and paid for.
As far as the abundant overflow of liquid funds is concerned, to further secure the loot, it must be broken up into many separate transactions and sent abroad through ubiquitous unofficial banking channels. This must be done via time-tested and foolproof multiple points of exit to multiple destinations, secreted in dozens of bank accounts in as many benami 'front' names as possible. Obversely, they will be 'secret' and 'anonymous' numbered accounts. If one attempts to unravel this complex ball of twine in terms of evidence admissible in a court of law, it would certainly keep several generations employed.
The Swiss have built a nation on this secrecy. They hold tens of billions of dollars in accounts set up not only over centuries of Europe's turbulent past, but also between two World Wars with no apparent claimants. The money trail has gone cold, that too for several years now. While the account-holders mostly consisted of monied Europeans, others were Nazis, Indian princes, deposed dictators and so on. This unclaimed money makes for a significant chunk of the Swiss economy.
Such is the Swiss sophistication and success at their shadowy and secretive management of 'no-questions-asked' banking, that copycat tax havens have been established all over the world: They are mushrooming every day to cater to new destinations, such as a resurgent Africa. Collectively, they provide much comfort to those in need of their services.
Yet there is another side to this story. Egypt's beleaguered President Hosni Mubarak is rumoured to have stashed over $70 billion for the proverbial rainy day that appears to be now upon him. But, as in many such cases, he will be allowed to leave with his money for minimising turmoil and bloodshed, and Egypt will be happy to be free from him at last. Besides, Egypt allows for 20 per cent local participation in all joint ventures with foreign entities and many other Arab locations insist on as much as 51 per cent local 'sponsorship'. Consequently, powerful people become legitimate beneficiaries of their enterprise, notwithstanding that it is a concept different from the Western idea, grafted onto India, that one cannot, or certainly should not, benefit from one's position in the Government. But, due to local laws in Arabia, it is not illegitimate.
India is probably no more corrupt than the next nation, but it is burdened with untenable laws that most of the powers-that-be have seen fit to circumvent. The British were past masters at disguising their plunder: Sometimes via the East India Company and often through a procession of princely stooges. They played at Victorian rectitude, much like their putting pantaloons on the legs of their pianos, while indulging in unbridled licentiousness.
What we need to do is to revisit our outdated laws and amend them if we are to tackle the scourge of the black economy. It exists partly because the Government and its constituent party machineries cannot do without it and, to a certain extent, neither can business and industry in the present dispensation. A profligate and inefficient use of tax revenues with a huge Government living high makes for a very understandable desire to dodge taxes on the part of a long suffering public.
